New Jersey Passes Law Granting Limited Immunity to Planned Real Estate Developments for Civil Liability from COVID-19 Damage Claims

July 2nd, 2021 | Community Association Law Blog, News

By Eric F. Frizzell, Esq. and Mary Wynn Seiter, Esq.
July 1, 2021

Summary of the new law

On July 1, 2021, Governor Philip Murphy signed into law a bill (A4979/S3584) that grants limited immunity to planned real estate developments from civil liability for damages arising from, or related to, an exposure to, or transmission of, COVID-19 on the premises of the planned real estate development. (The full text of the act is printed at the bottom of this article.)

There is no such immunity, however, for “acts or omissions constituting a crime, actual fraud, actual malice, gross negligence, recklessness, or willful misconduct.”

Moreover, for a planned real estate development to be entitled to immunity, it must have prominently displayed at the entrance of any communal space shared by the planned real estate development’s residents and their guests, such as pools, gyms, and clubhouses, a sign stating the following warning:

”ANY PERSON ENTERING THE PREMISES WAIVES ALL CIVIL LIABILITY AGAINST THE PLANNED REAL ESTATE DEVELOPMENT FOR DAMAGES ARISING FROM, OR RELATED TO, AN EXPOSURE TO, OR TRANSMISSION OF, COVID-19 ON THE PREMISES, EXCEPT FOR ACTS OR OMISSIONS CONSTITUTING A CRIME, ACTUAL FRAUD, ACTUAL MALICE, GROSS NEGLIGENCE, RECKLESSNESS, OR WILLFUL MISCONDUCT.’”

The new law takes effect immediately and expires on January 1, 2022.

BFC Comments

While this new law provides important liability protection for community associations, it does not expressly grant immunity to association board members or property managers. Therefore, while one may argue that common sense dictates that board members and/or property managers should also be immune under the act, the ultimate determination of that issue unfortunately will need to await clarification by the State Legislature or decision by the courts. This uncertainty means that even though a community association itself may enjoy immunity against a claim, it could still be required to indemnify its board members pursuant to the association’s by-laws and New Jersey statute, and its property management company pursuant to the indemnification clause commonly found in management agreements.

Moreover, due to the fact that there is no immunity for acts or omissions constituting a “crime, actual fraud, actual malice, gross negligence, recklessness, or willful misconduct”, community associations should not yet return their operations to pre-pandemic standards. Instead, it remains important to follow the recommendations contained in the New Jersey Department of Health’s guidelines for gyms and pools, and to impose similar appropriate requirements, such as recommended by the CDC, on the use of other communal facilities and amenities. The DOH guidelines provide a standard of care against which a court may evaluate an association’s conduct, and failing to adhere to them could result in a claim that an association was grossly negligent or reckless – and which could result in the loss of the immunity granted by the new law.

It also is critical that a community association fully comply with the law’s requirement for the specified signage. The sign must contain the exact language mandated by the law – associations should not delete or paraphrase any of the wording. Make sure the sign is in all capital letters as shown in the statute. The sign should be at every entrance to a gym, pool, clubhouse, or other communal facility, not just a “main” entrance. The sign must be “prominently displayed” – although the act does not define this term, it would seem that the sign should be very close to the entrance, and perhaps even posted on the entrance door, large enough to be immediately visible, and easily readable. In other words, you can’t miss it.

Our law firm would be glad to answer any questions you may have about complying with the new law.

This article does not constitute legal advice. Consult with your attorney regarding any questions you may have regarding the new law.

FULL TEXT OF NEW LAW

1. a. A planned real estate development shall be immune from civil liability for damages arising from, or related to, an exposure to, or transmission of, COVID-19 on the premises of the planned real estate development, so long as the planned real estate development has prominently displayed at the entrance of any communal space shared by the planned real estate development’s residents and their guests, such as pools, gyms, and clubhouses, a sign stating the following warning:

“ANY PERSON ENTERING THE PREMISES WAIVES ALL CIVIL LIABILITY AGAINST THE PLANNED REAL ESTATE DEVELOPMENT FOR DAMAGES ARISING FROM, OR RELATED TO, AN EXPOSURE TO, OR TRANSMISSION OF, COVID-19 ON THE PREMISES, EXCEPT FOR ACTS OR OMISSIONS CONSTITUTING A CRIME, ACTUAL FRAUD, ACTUAL MALICE, GROSS NEGLIGENCE, RECKLESSNESS, OR WILLFUL MISCONDUCT.”

b. The immunity provided pursuant to subsection a. of this section shall not apply to acts or omissions constituting a crime, actual fraud, actual malice, gross negligence, recklessness, or willful misconduct.

c. Nothing in this section shall be construed to limit or modify any claim for relief under the workers’ compensation law, R.S.34:15-1 et seq.

d. As used in this section:

“COVID-19” means the coronavirus disease 2019, as announced by the World Health Organization on February 11, 2020, and first identified in Wuhan, China.

“Planned real estate development” means the same as that term is defined in section 3 of P.L.1977, c.419 (C.45:22A-23).

2. This act shall take effect immediately and shall expire on the first day of calendar year 2022.